Finance

Basic facts you need to understand about GST payment

The Indian tax system has already been quite complicated. Dealing with direct as well as indirect taxes was a time consuming task for many a businesses. But with the set-up of the Goods and Services Tax (GST) this financial year, a major change has been predicted. In fact many have stated that this new tax system is going to be a ‘game changer’ for the economy of India.

Here are some basic facts which will help one understand GST payment-

Levy of GST

GST is levied anytime there is a ‘supply’. As per the GST Act, supply implies any goods and services sale. Exchange, barter, transfer, lease or rental also means supply as per the Act. Thus, businesses who undertake one or more of the above mentioned activities are entitled to goods and service tax payment. As per the Government, there are a few goods as well as services that do not come under GST payment. Thus, business should initially identity if good and services they deal with come under the GST payment bracket or not.

Application of GST

With the set-up of GST, one of the most important questions that have arisen is- which businesses should register for GST payment? It is mandatory for all businesses dealing in inter-state transactions and website sales to apply for GST registration. Those who are already registered under VAT and service tax can opt to transfer to GST registration. In case of businesses that have a turnover of about 20 lakhs, GST registration is not compulsory. In case of North East states the turn over value is 10 lakhs.

Registration with GST will help in making timely goods and service tax payment.

Process of GST payment

Under GST the payment will be primarily done electronically. Thus, it is important for most businesses to set up computer systems and methods of online payments. The challan will be electronically generated through the GSTN Common Portal. No manual challan will be available. Online payment mode has been adopted to facilitate the tax payer.

Mode of GST payment

Goods and service tax payment can either be done through the credit ledger or the cash ledger. The transfer of money into the cash ledger can be done through a credit or debit card and net banking. One can also deposit money in specified banks that have been authorized to collect GST payment.

In case of GST, payment needs to be on a monthly basis. Taxes should be cleared before the 20th of the next month. Those under the composition tax scheme need to clear taxes on a quarterly basis.

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